ERG Asset Management LLC

Item 5 – Fees and Compensation

Fees paid to the Adviser vary depending on assets held and degree of difficulty in the investment
management process. The fees the Adviser receives for services provided reflect the particular
client’s needs, and as a result may vary significantly from client to client. Typically, the Adviser
may, based on a client’s portfolio and needs, charge a flat rate monthly dollar amount and possibly
certain realization fees based on a percentage of assets monetized.

The Funds and Portfolios bear all of their operating expenses including, but not limited to,
management, admin, legal, and accounting fees (including third-party accounting services). Please
see Item 12 of this Brochure for details on ERG’s brokerage practices.

It is important that Investors refer to the applicable Fund Documents and Investment Management
Agreements for a complete understanding of how ERG (and any affiliates which may also provide
services to the Funds and Portfolios) are compensated for services, including in particular with
respect to performance-based compensation. Investors should also refer to the applicable Fund
Documents and Investment Management Agreements for a complete understanding of the expenses
that will be borne by Investors. The information contained herein is a summary only and is qualified
in its entirety by the Fund Documents and the applicable Investment Management Agreements.

Item 7 – Types of Clients

The Adviser services and manages portfolios of hedge funds that are currently winding down
and/or where the major investors desire to replace the incumbent manager. For the purposes of this
brochure, the hedge funds, and not the investors in those funds, are considered the Adviser’s
clients.

Target funds will likely be sourced via:

•       The Advisers’ Board of Managers

•       Receivers and liquidators

•       Lenders to hedge funds

•       Investor community